Comments

Popular posts from this blog

"I would like to bet ten tens on the tenth horse in the tenth
race, please."

Last summer, on a warm cloudy day June 11, 2016 in
Elmont New York, a good friend of mine (Rob) confidently walked up to the cashier
at Belmont and spoke those famous words. Ten Tens on Ten in the Tenth Race. In fact, it had been decided it months
earlier. We had been discussing hosting his bachelor party in New York, go to the
Belmont Stakes, and watch a Yankees vs Tigers game and Rob convinced the group to go to New York by proudly proclaimed his
prophecy. I had almost forgotten about this bold prediction when I witnessed him at the register, but when I looked up, and saw Flintshire,
the 10th horse in the race upcoming race was the favorite. “What could possibly go wrong?” I thought to myself (an options trader who
bought a racing program attempting to handicap and gain an ‘edge’ in the previous
nine races unsuccessfully). I went to a pretzel
vendor and changed 5 twenties into ten tens, wal…

The CBOE Correlation
Index (KCJ) is close to the lowest level we have seen since it was first listed in 2007. The KCJ
measures the implied movement of the S&P 500 components options, compared
to the implied movement of the S&P 500 index options. Simply put, the
higher the number, the more likely all stocks are going to move together.
Conversely, a low number will be characterized by sector rotation, and flat
markets; one sector moves higher, another moves lower. Correlation, for lack of
a better term, is correlated with volatility. Not surprisingly, 30-day S&P
500 historical volatility is near the low level of 6.5%. Currently at
33.5, KCJ is sitting close to rock bottom, lower than where it was in 2007, (but
not lower than where Lindsay Lohan was in 2007).
So far this year, the market
has been able to grind higher, characterized by leadership in FANG(Facebook Apple/Amazon, Netflix, Google) and sector
rotation. As the summer hit, FANG has slowed with GOOGL and AMZN hitting…

Kim Jung-Un gave the U.S. an unwelcome birthday present as he test launched an ICBM capable of reaching Alaska. North Korea has made it very clear that their
intention is to grow their nuclear capability to be able to reach the Continental
United States. This would destabilize
the region, and world overnight. Now I don’t expect the war drum beating will spill over into
mortar shells raining down on Seoul anytime soon. There has been a choreographed diplomatic
dance going on for the past 40 years with North Korea that is likely to continue as follows; North Korea acts out, U.S. gets upset, U.S. sanctions them (with
help from China). North Korea gives up
their acting out activity (promises they won’t do it again), a North Korean
South Korean gesture of goodwill takes place, such as joint Olympic teams,
joint economic projects, North Korea gets to declare victory.
However, this go around seems slightly different. Now we have a President who has made it very
clear in his campaign tha…